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February 24, 2009

Eli Lilly & Co. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2009)

The Federal Circuit today affirmed a decision by the District Court for the Southern District of Indiana to extend the statutory 30-month stay under 21 U.S.C. § 355(j)(5)(B)(iii), thereby preventing the U.S. Food and Drug Administration from approving the Abbreviated New Drug Application (ANDA) filed by Defendant-Appellant Teva Pharmaceuticals USA, Inc.

Seeking approval to manufacture and market a generic version of Plaintiff-Appellee Eli Lilly and Company's raloxifene hydrochloride formulation, which Lilly markets as Evista® for the treatment and prevention of postmenopausal osteoporosis, Teva filed an ANDA with the FDA in 2006. In response, Lilly filed an infringement suit against Teva on June 29, 2006, alleging that Teva's ANDA filing infringed four Lilly patents (U.S. Patent Nos. RE38,968; RE39,049; RE39,050; and 6,906,086; directed to methods of preventing and treating postmenopausal osteoporosis using raloxifene). The FDA followed by staying approval of Teva's ANDA for 30 months from the date Lilly received Teva's Paragraph IV notifications, with the stay set to expire on November 16, 2008.

In February 2007, Lilly amended its complaint to allege infringement of three additional patents (U.S. Patent Nos. 6,458,811; 6,797,719; and 6,894,064; directed to raloxifene particle size and formulation). On July 8, 2008, Teva amended its ANDA to include a new particle-size measuring methodology for its raloxifene tablets, and notified Lilly of the amendment two days later. In addition, Teva provided batch samples of its raloxifene tablets to Lilly on July 28, August 19, and September 17, 2008, and produced 27,000 pages of documentation related to the new particle-size measuring methodology on September 5, 2008.

In response, Lilly moved for an extension of the 30-month stay under 21 U.S.C. § 355(j)(5)(B)(iii), which allows a District Court to shorten or extend the statutory 30-month stay if "either party to the action fail[s] to reasonably cooperate in expediting the action." In its motion, Lilly alleged that Teva "fail[ed] to 'reasonably cooperate in expediting the action' . . . as evidenced by Teva's last-minute alteration of its proposed drug product and its 'multiple delays in producing critical discovery . . . [which have] adversely affected Lilly's infringement case and trial preparation.'" The District Court granted Lilly's motion for a stay, extending the 30-month stay until March 9, 2009, the date on which the trial was scheduled to begin.

In an opinion by Circuit Judge Rader, who was joined by Chief Judge Michel, a panel majority determined that the record contained sufficient evidence upon which the District Court could base its decision to extend the 30-month stay. In particular, the majority noted that evidence in the record indicated that Teva had altered its particle size manufacturing specification and the method of measuring particle size, and "then delivered its changed samples to Lilly past the court's August 18, 2008, discovery deadline" (as the majority notes elsewhere in the opinion, one set of batch samples was delivered to Lilly prior to the discovery deadline).

In affirming the District Court's decision to extend the stay in this case, the majority distinguished the instant appeal from its decision in Andrx Pharmaceuticals, Inc. v. Biovail Corp., 276 F.3d 1368 (Fed. Cir. 2002), where the Federal Circuit vacated a district court decision to shorten the 30-month stay. In Andrx, the CAFC held that the district court had erred by basing its decision to shorten the stay on Biovail's actions before the FDA (Biovail submitted a second patent on its NDA and, in a practice that is no longer permitted, secured a second 30-month stay after filing suit against Andrx on that patent). According to the majority, "[u]nlike Andrx, in this case, the district court extended the statutory thirty-month stay based on its findings of Teva's lack of cooperation in expediting the patent litigation in its court," rather than on Teva's filing with the FDA.

Circuit Judge Prost, in dissent, argued that while "[t]he thirty-month stay described in 21 U.S.C. § 355(j)(5)(B)(iii) may be extended for one reason and one reason only: 'because either party to the action failed to reasonably cooperate in expediting the action,' . . . the district court never made any finding related to the statutory standard, i.e., whether Teva reasonably cooperated in expediting the action." According to the dissent, the District Court provided only two justifications for extending the stay -- giving Lilly sufficient opportunity to identify the nature and composition of Teva's raloxifene product and providing Lilly with a reasonable amount of time to test Teva's altered raloxifene samples before trial -- and "[n]either of these reasons remotely resembles the statutorily required finding." Noting that the Federal Circuit had examined the issue before it only once before (in Andrx), the dissent concluded that "[t]o affirm in this case is to effectively eliminate the statutorily required finding, and to prematurely terminate the development of appropriate standards governing modification under 21 U.S.C. § 355(j)(5)(B)(iii)."